What is a Notice of Commencement?

Detailed assessment proceedings can be commenced in the event that an agreement has not been made with a paying party following the award of costs in any Court case. The paying party must be formally served with a Bill of Costs before any application has been made to have costs assessed and approved. A Notice of Commencement is served on a paying party alongside the Bill of Costs, setting out the amount sought by the receiving party. Form N252 is used to serve notice on the paying party and CPR 47 sets out the rules for the procedure for the assessment of costs.

Typically, a Bill of Costs should be served within three months from the date of any costs order or deemed order as to costs (such as a Part 36 Offer acceptance, or the filing of a Notice of Discontinuance).

What is Required When Serving a Bill Formally?

When serving a Bill formally, the receiving party must serve a Notice of Commencement in the relevant practice form (N252) on the paying party alongside a copy or copies of the bill of costs, as required by Practice Direction 47.  Copies of fee notes from the Solicitor and any expert witnesses, as well as invoices or receipts for expenses should also be sent to the paying party.

The Bill of Costs should also be accompanied by a certified signed backsheet, signed by either a Solicitor/legal representative, or the receiving party themselves, confirming that the Bill of Costs is accurate and that the indemnity principle has not been breached (that is, that the costs claimed in the Bill do no exceed those permissible by the retainer).

The receiving party must inform anyone with a financial interest in the case that they are applying for detailed assessment in writing within three months of receiving the original Court Order that awarded costs.  They must then try to agree the Bill of Costs with the paying party.

The Notice of Commencement must be properly served on Solicitors who have authority to accept service. An example of improper service of the Notice was shown in the case of  Edray Ltd -v- Canning [2015] when the Defendant was estopped, by reason of conduct, due to the fact that the Notice of Commencement was sent to a firm of Solicitors who had not gone on record as acting for the Defendant.

What to do if you Receive a Notice of Commencement

If you have been served with a Notice of commencement, you should reply to the same and the Bill of Costs within 21 days of service of the Bill. If you do not agree with anything in the Bill of Costs, you should send your ‘Points of Dispute’ which state the costs you disagree with, and any reduced offers you are prepared to make. The receiving party may then send a ‘Points of Reply’ within 21 days, either agreeing to the reduced amount or offering an alternative amount. If costs cannot be agreed, an application for a detailed assessment at Court can then be made.

 If you do not send your Points of Dispute within the required timeframe, the receiving party can then apply for default costs certificate which will order you (the paying party) to pay costs in full within 14 days.

The ARC Costs team are always happy to help with costs challenges, and the writer can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

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